Trading Carbon Credits

Despite the many sobering signs around us regarding the quality of our natural environment, there are a few practices currently being explored that bring hope to the topic. One such practice is that of using “carbon credits” as incentive to reduce and/or sequester excess carbon.

The concept of using credits in order to reduce carbon emissions first appeared in 1988 but was not acted on until the Kyoto Protocol of 1997 ( The Kyoto Protocol, named for its signing location in Kyoto, Japan, is an international treaty that outlines the commitment of the world’s most powerful countries to reduce greenhouse gas emissions (GHG’s). It is an extension of the 1992 UN Framework Convention on Climate Change and includes over 190 of the world’s countries. This Protocol was created and signed because of an increasing global awareness of the rising levels of GHG’s in the atmosphere due to human activities. While some of the common GHG’s include methane, nitrous oxide, and multiple chlorofluorocarbons from industrial production, carbon dioxide is responsible for over 50% of all GHG’s.

According to Kelly Garry of the National Agricultural Law Center in Fayetteville, Arkansas, Kyoto set up a system of “emissions trading” in which governments give polluters a number of permits that allow a certain level of pollutant emission. The permit holder can either use the permit and emit the designated amount of GHG’s or they can reduce their emissions and sell the permit. Garry states that the “sequestration of the carbon in the soil is calculated into a carbon emission reduction credit (CERC), one of which is equal to one metric ton of sequestered carbon.” In this way, industries that are emitting pollutants are incentivized to reduce emissions or work with other companies to reduce overall emissions.

A second system is also developing in which companies pay farmers or landowners for every unit of GHG they emit over a certain level, and the farmer leaves the corresponding amount of land un-tilled so that it can sequester the amount of GHG’s that the company will be emitting. In this way, farmers are incentivized to use no-till methods that prevent erosion and groundwater contamination and, simultaneously, companies are incentivized to reduce their GHG emissions. The land of the United States has the potential to store 180 million more metric tons of carbon per year than it currently does, and the practice of trading carbon credits and emissions credits could utilize this potential.

In either case, lawmakers and legal professionals are needed who 1) understand the economic and environmental variables on both sides of the equation, and 2) are aware of the incredible carbon storing power of America’s soils. Without the accompanying policy foundation that makes initiatives such as these possible, we may still have to wait for carbon credit trading to become a viable option for GHG mitigation.



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